Not much steam in Turkish Stream

Balkan leaders and publics alike have long been enthral with pipelines criss-crossing the region. First, it was South Stream, the $14bn piece of infrastructure projected to pump 63 billion cubic metres (bcm) per year to Italy and Austria via the Black Sea and a string of Balkan countries.

Now it is Turkish Stream – an alternative route proposed by none other than Russian President Vladimir Putin during his visit to Ankara last December in defiance of EU pressure. Even before Moscow and Ankara have worked out the financial and technical details, governments across southeast Europe have struggled to get their cut of the deal. 

Earlier this month, Hungary’s Foreign Minister Peter Szijjarto hosted his counterparts from Greece, Serbia and Macedonia to discuss how they can collectively plug into Turkish Stream. A day later, Greek Prime Minister Alexis Tsipras, leader of the radical left SYRIZA, was discussing the same subject with Putin in Moscow.

“We have to make it clear […] there will not be any Turkish Stream in the Greek territory but a Greek pipeline,” he commented at the joint press conference following the tete-a-tete in the Kremlin, touting Greece as an “energy hub” in the future.

Last week, Gazprom’s CEO Alexei Miller made his way to Athens amid rumours that Russia is to loan cash-strapped Greece a substantial chunk of money for its section underwritten by revenue from the future transit fees. 

Future prospects

Yet, all the buzz around Turkish Stream (or whatever name the pipeline gets to bear) cannot hide the fact that, similar to the lapsed South Stream, its future prospects are anything but clear. Turkey did sign the Memorandum of Understanding for the project, but there is no legally binding Intergovernmental Agreement, let alone a commercial contract between Gazprom and the Turkish public gas utility BOTA.

Making good use of its strong bargaining position, Ankara demands a substantial discount on the gas coming from Russia, with Gazprom already agreeing to cut the price by a tenth. Turkey is in no rush as its priority is to diversify supplies and meet soaring demand by industries and households. Inaugurating the so-called Southern Gas Corridor, the Trans-Anatolian Pipeline (TANAP) is set to carry downstream 16 bcm of Caspian Sea gas (all contracted, unlike the putative volumes in Turkish Stream) from the Azerbaijani field of Shah Deniz by 2019, tops the list of priorities.

There are issues concerning the countries further down the line too. South Stream was cancelled because Gazprom was loathe to conform with the rules of the EU’s Third Energy Package commanding that rival firms should get access to transit infrastructure. It is difficult to conceive that Brussels makes an exception for Turkish Stream, however hard Greece, Hungary, Austria, or others lobby for it.

Lack of goodwill is not simply about the clash over Ukraine or the sanctions against Russia. The European Commission, conducting an anti-trust investigation against Gazprom since September 2012, pressed charges against the firm last week accusing it of unlawful manipulation of markets in a number of central and eastern European countries.

Greece is already under scrutiny over the sale of a 66 percent stake in DESFA, its gas grid operator, to Azerbaijan’s SOCAR, the state oil company. Serbia and Macedonia, though not EU members, have committed to implement the Third Energy Package as part of their obligations under Brussels-sponsored Energy Community.

Imports through the Caspian

As with Turkey and Greece, Serbia is also looking towards future imports from the Caspian through a proposed interconnector with Bulgaria, with Prime Minister Aleksandar Vucic discussing economic cooperation in Baku last week.

Back in January, Miller famously warned Commissioner Maros Sefcovic, in charge of Energy Union, that the EU should hurry up to build an extension of the Turkish Stream from the Greek-Turkish border onwards. Russia says it’s intent on redirecting all the gas flowing via Ukraine to the new route through Turkey, once the contract with Kiev expires in 2019. 

But it is highly doubtful that either governments or indeed the big energy firms, which are Gazprom’s principal customers, would be prepared to foot the bill for a new pipeline over the Balkans. Unless they are offered a handsome discount which will make the project uneconomical for the Russian behemoth. Russia has failed to stitch a deal with friendly EU governments too. Media hype aside, Miller’s recent visit to Greece did not lead to much beyond vague promises for loans in exchange for endorsing the extension of the pipeline.

Despite all shortcomings, the yet unborn Turkish Stream has upsides too. It is proving a very useful foreign policy instrument for the Kremlin to probe and disrupt the EU’s tentative unity forged against recalcitrant Russia.

It may serve Turkey too: Its first phase would bring 16 bcm of fresh volumes to its market, which is already second only to Germany’s when it comes to Gazprom sales.

But as in the case of gas deals struck with China in 2014, it would be Turkey, not Russia, setting the terms. 

Dimitar Bechev is based at the European Institute, London School of Economics. He writes on Turkey, South East Europe and Russian foreign policy. He was formerly Senior Policy Fellow and Head of Sofia Office at the European Council on Foreign Relations and lecturer at the University of Oxford. 

The views expressed in this article are the author’s own and do not necessarily reflect Al Jazeera’s editorial policy.